Morning MoneyBeat Asia: Central Bankers Heading for the Punch Bowl

Market Snap: At the New York close: S&P 500 2% at 1930.68. DJIA down 1.9% at 16563.30. Nasdaq Comp 2.1% at 4369.77. Treasury yields mixed; 10-year up to 2.561%. Nymex crude oil down 2.1% at $98.17. Gold down 1% at $1,281.30/ounce.

How We Got Here: Funny what one day can do. U.S. stocks suffered their single-worst session in months on Thursday, with the Dow off more than 300 points. That alone sent the index into the red for the month – down 1.6% – and snapped a five-month winning streak. The Dow, down six of the past seven sessions, is off 2.5% over the last three trading days. Gold and oil dropped, too, although bonds stabilized one day after that market saw its worst single-session since November.

The Dow is now in the red for the year, off a slight 14 points.

What’s changed all of sudden? The easy thing to point to is the Fed. The U.S. central bank is already mapping out its exit from its historically aggressive monetary policy, and with its targets for inflation and unemployment coming within its sights, there is more chatter from market that the Fed may start hiking rates even sooner than expected.

Why, you ask, does that matter when the market has long knownthat this day would eventually come? Well, it’s one thing to know the Fed’s going to take away the proverbial punch bowl – at some point. It’s another to see the central banker heading for the bowl.

Coming Up: Several Asian nations will unveil their manufacturing purchasing manager indexes Friday, including China, Australia, South Korea, Japan, Indonesia and India. The question these PMI readings could answer is whether the apparent stabilization in China’s economy, which showed a modest acceleration in the second quarter, helped sustain business activity around the rest of the region as it entered the third quarter.

Australia’s stock market, for one, has rallied sharply on hopes that a China rebound will spur earning growth. And yet prices for many of the key industrial commodities that China imports remain depressed, which could suppress growth in Australia and other commodity-producing nations such as Indonesia.

On the other hand, there are a signs of a regional pickup in electronics orders associated with smartphones, in part because of upgrades to Apple models and in part because of rising consumer demand in China and other countries with an emerging middle class.

What You Missed Overnight

U.S. Stocks TumbleU.S. stocks ended July with a more than 300-point selloff for the Dow Jones Industrial Average, a swoon that snapped a five-month winning streak for the broader market.

Argentina’s Markets Tumble After Debt DefaultStocks and bonds in Argentina tumbled following the country’s second default in 13 years, as doubts emerged about the prospects for a bank-engineered deal to resolve a standoff with hedge-fund creditors and government officials suggested they could take the fight to an international court.

Israel Moves to Replenish Gaza ForcesIsrael’s military said Thursday it was calling up 16,000 reserves for its campaign against Hamas militants in the Gaza Strip, a day after some of the deadliest fighting of the 23-day conflict.

France’s Iliad Makes Bid for T-Mobile USFrench upstart telecommunications company Iliad made a buyout offer for T-Mobile US in a bold bid to counter an effort by Sprint to combine with the fourth-largest wireless carrier in the U.S.

From The Wall Street Journal Asia

Investigators Reach Site of Malaysia Air Flight 17 CrashInternational investigators trying to recover the remaining victims from Malaysia Airlines Flight 17 reached the crash site for the first time in nearly a week. Meanwhile, Ukrainian lawmakers approved legislation allowing hundreds of foreign experts to arm themselves and import specialist equipment for their investigations.

Thailand Economy Still ShakyThailand’s economy remained on a bumpy path in June as the volatile political environment continued to affect consumption, investment and tourism, a monthly report by the Bank of Thailand showed.

Luxury-Car Makers Attract Scrutiny in China Chinese officials who oversee pricing matters are inquiring into the practices of foreign luxury-car makers in the world’s No. 1 car market, which has become a significant profit center for high-end brands.

From MoneyBeat

The Fed’s Wage WatchThe debate over how much slack is in the U.S. labor market is heated, but its resolution will be clear: When wage growth heats up, the economy will have absorbed enough job-seekers to push inflation higher.

Bitcoin Pioneer Unveils New ProjectJed McCaleb, the reclusive bitcoin pioneer who founded both Mt. Gox and Ripple, unveiled his latest, much anticipated cryptocurrency project on Thursday, a user-friendly product that aims to encourage mainstream adoption of digital money.